Profile: Senate Finance Committee

Senate Finance Committee was a participant or observer in the following events:

The Senate Finance Committee, chaired by Senator Max Baucus (D-MT), holds a series of hearings about health care reform, on April 21, May 5, and May 12. In all, 41 experts testify, but none of them advocate the so-called “single-payer” form of health care, a system which essentially has the government providing health care insurance instead of private insurers—“Medicare for all Americans,” as some characterize it. [Politico, 5/5/2009; Single Payer Action, 5/21/2009] The experts are from organizations like America’s Health Insurance Plans (AHIP), the health industry’s largest lobbying firm, and health insurers Blue Cross and Aetna. Some of the invited organizations employ former Baucus staff members. [Rolling Stone, 9/3/2009] Baucus says that single-payer is “off the table,” and will not be considered. [TPM Cafe, 5/5/2009]Health Industry Heavy Donors to Baucus - The nonpartisan organization Consumer Watchdog has reported that Baucus, one of the Senate’s most important architects of Congressional health reform, has accepted more campaign contributions from the health insurance and pharmaceutical corporations than any other current Democratic member of the House or Senate. During the last two election cycles, he received $183,750 from health insurance companies and $229,020 from drug companies. [Single Payer Action, 5/21/2009]Protesters Disrupt Hearings - Protesters disrupt the hearings by standing up and shouting criticisms of the committee over its failure to bring single-payer into the discussion. Eight protesters are led out of the hearing room and later arrested. At one point, Baucus asks for more police officers to enforce security. The protests are organized by Healthcare Now, Physicians for a National Health Program, and Single Payer Action, all of whom support a single-payer, government-run health care system. One protester calls the hearings nothing more than “political theater.” For his part, Baucus assures the audience, “I want you to know I care deeply about your views.” [Politico, 5/5/2009] The eight protesters spend around seven hours in jail. One, Dr. Margaret Flowers, later recalls: “It’s funny, the policemen were all telling us their horror stories about health care. One was telling us about his mother who was 62 and lost her job and was uninsured, waiting to get Medicare when she was 65.” The protesters are sentenced to six months’ probation. Baucus later admits that not allowing single-payer advocates to participate in the hearings was a mistake; he will eventually agree to meet with a group of those advocates (see June 3, 2009). Single-Payer Never Considered - In September, Rolling Stone reporter Matt Taibbi will note that Baucus, like President Obama and other prominent Democrats, has supported single-payer insurance in theory, but asserts such a proposal would never get through Congress. Journalist Russell Mokhiber, who advocates for single-payer as a member of Single Payer Action, later says that the Obama administration and Congressional Democrats made an agreement with health industry leaders months before considering legislation for health care reform that single-payer would not be part of their proposals. In return, Mokhiber will say, they asked the industry not to oppose their reform efforts, a request that the industry has generally not honored. [Rolling Stone, 9/3/2009]

Max Baucus (D-MT), the chairman of the Senate Finance Committee, meets with advocates of “single-payer,” or government-run health insurance. Baucus recently chaired hearings on health care reform which excluded single-payer advocates (see April 21-May 12, 2009). He meets with representatives of the advocacy group Physicians for a National Health Program (PHNP), two Harvard University medical professors, a medical school dean, and representatives of the California Nurses Association. One of the participants, Dr. David Himmelstein of PHNP, says: “Bowing to mounting pressure from single-payer advocates around the nation, Senator Baucus has asked to meet with some representatives of the single-payer movement.… We have no illusions that our discussions alone will persuade Senator Baucus to back a single-payer bill. But the meeting is a clear indication that demonstrations and activism can move even our money-corrupted political culture.” Some polls show that a majority of Americans back single-payer insurance, as do doctors and health economists. [Single Payer Action, 5/31/2009]

Wendell Potter (r) being interviewed by Bill Moyers (l). [Source: PR Watch (.org)]Former health care executive Wendell Potter, who left the insurance giant Cigna after fifteen years, appears on “Bill Moyers’ Journal.” He was formerly the head of corporate communications before he resigned his position, a post he calls “the ultimate PR job.” He says he was not forced to leave the company, and was extremely well compensated for his duties. He left after realizing that the health care industry is using underhanded and hurtful tactics to undermine the drive towards health care reform. He never went to his bosses with his observations because, he says, “for most of the time I was there, I felt that what we were doing was the right thing. And that I was playing on a team that was honorable. I just didn’t really get it all that much until toward the end of my tenure at Cigna.” Health Care Expo Changed His Perceptions - In June 2007, Potter recalls, his perceptions were drastically changed by his visit to a health care exposition in Wise, Virginia (see June 2007). Changing Plans - The industry shifted from selling primarily managed care plans, he says, to what they call “consumer-driven plans.” Despite the name, they are health care plans with high deductibles and limited coverage. 'Highlight Horror Stories' - Moyers shows Potter a copy of an “action plan” devised by America’s Health Insurance Plans (AHIP), the industry’s trade association. In large gold letters, the plan tells lobbyists and industry representatives to “Highlight horror stories of government-run systems.” Potter says that AHIP and other industry representatives try to paint government-run health care as socialism, and as inevitable failures. “The industry has always tried to make Americans think that government-run systems are the worst thing that could possibly happen to them,” he says, “that if you even consider that, you’re heading down on the slippery slope towards socialism. So they have used scare tactics for years and years and years, to keep that from happening. If there were a broader program like our Medicare program, it could potentially reduce the profits of these big companies. So that is their biggest concern.” Moyers also notes that the AHIP plan targets the film Sicko, a 2007 documentary by leftist filmmaker Michael Moore that portrayed America’s health care industry in a dismal light. AHIP’s action plan is to “Position Sicko as a threat to Democrats’ larger agenda.” Potter says that was an effort to discredit the film by using lobbyists and AHIP staffers “to go onto Capitol Hill and say, ‘Look, you don’t want to believe this movie. You don’t want to talk about it. You don’t want to endorse it. And if you do, we can make things tough for you.’” If they did, AHIP would retaliate by running negative ads against the lawmakers in their home districts or other electoral punishments. AHIP focused strongly on the conservative Democratic Leadership Council. Another tactic, as delineated in the memo: “Message to Democratic insiders. Embracing Moore is one-way ticket back to minority party status.” Moyers says that AHIP attempted to “radicalize” Moore and portray him as an extremist who could not be believed. Many politicians used AHIP talking points in discussing Moore and his film. “So your plan worked,” Moyers observes. Potter agrees: “It worked beautifully.” The lesson that was lost from Moore’s film, Potter says, was that Americans “shouldn’t fear government involvement in our health care system. That there is an appropriate role for government, and it’s been proven in the countries that were in that movie.” Conservative Counter-Strategy - Moyers then displays a memo from Republican strategist Frank Luntz, who in the spring of 2009 wrote a strategy memo for health care reform opponents. The memo reads in part: “First, you have to pretend to support it. Then use phrases like, ‘government takeover,’ ‘delayed care is denied care,’ ‘consequences of rationing,’ ‘bureaucrats, not doctors prescribing medicine.’” He then shows film clips of House Minority Leader John Boehner (R-OH), Senate Minority Leader Mitch McConnell (R-KY), Senator Jon Kyl (R-AZ), and others using Luntz’s talking points in discussions on the floors of Congress. Potter says that many conservatives—Democrats as well as Republicans—“are ideologically aligned with the industry. They want to believe that the free market system can and should work in this country, like it does in other industries. So they don’t understand from an insider’s perspective like I have, what that actually means, and the consequences of that to Americans. They parrot those comments, without really realizing what the real situation is.” He notes that Representative Zach Wamp (R-TN), who grew up very near Potter’s childhood home in Chattanooga, told reporters that half of America’s uninsured don’t want health care, they would rather “go naked and just take the chance of getting sick. They end up in the emergency room costing you and me a whole lot more money.” Potter notes that the word “naked” is an industry term for people who choose not to buy health insurance. He calls Wamp’s comment “ridiculous” and “an example of a member of Congress buying what the insurance industry is peddling.” Moyers cites conservative Democrat Max Baucus, the chairman of the Senate Finance Committee, as another politician central to the health care reform process who is heavily influenced by corporate lobbyists—two of whom used to work on his own Senate staff. Potter says: “[I]t does offend me, that the vested special interests, who are so profitable and so powerful, are able to influence public policy in the way that they have, and the way that they’ve done over the years. And the insurance industry has been one of the most successful, in beating back any kinds of legislation that would hinder or affect the profitability of the companies.” Fierce Opposition to Public Option - The “public option,” the idea that the government would extend a non-profit, government-run health care alternative for citizens, is fiercely opposed by the health care industry. Potter says the reason why is “[t]he industry doesn’t want to have any competitor. In fact, over the course of the last few years, has been shrinking the number of competitors through a lot of acquisitions and mergers. So first of all, they don’t want any more competition period. They certainly don’t want it from a government plan that might be operating more efficiently than they are, that they operate.” Government programs such as Medicare and the Veterans Administration’s medical providers are far more efficient than private, for-profit health care providers, and the industry fears that having to compete with such a program will slash their profits. Medical companies will do whatever it takes to keep their profit margins—and shareholder returns—above a certain threshold. They will deny more claims, kick more people off their rolls, purge employer accounts, whatever it takes. Potter, evidently bemused, says, “You know, I’ve been around a long time. And I have to say, I just don’t get this. I just don’t understand how the corporations can oppose a plan that gives the unhealthy people a chance to be covered. And they don’t want to do it themselves.… I’m a capitalist as well. I think it’s a wonderful thing that companies can make a profit. But when you do it in such a way that you are creating a situation in which these companies are adding to the number of people who are uninsured and creating a problem of the underinsured then that’s when we have a problem with it, or at least I do.” A public option would help “keep [health care corporations] honest,” he says, and they would inevitably lose profits. Predictions - Right now the industry is primarily involved in what Potter calls a “charm offensive,” where it is attempting to give the perception that it, too, is for health care reform. But once Congress begins putting out specific legislative language, the industry and its flacks will begin attacking specific provisions. Moyers says the upshot is for the industry to either “kill reform” or prevent lawmakers from agreeing on a bill, just like what happened in 1993-94 under the Clinton administration. No matter what they say—favoring the elimination of pre-existing condition restrictions, for example—the industry will adamantly oppose reform of any kind. “They don’t want a public plan,” Potter says. “They want all the uninsured to have to be enrolled in a private insurance plan. They want—they see those 50 million people as potentially 50 million new customers. So they’re in favor of that. They see this as a way to essentially lock them into the system, and ensure their profitability in the future. The strategy is as it was in 1993 and ‘94, to conduct this charm offensive on the surface. But behind the scenes, to use front groups and third-party advocates and ideological allies. And those on Capitol Hill who are aligned with them, philosophically, to do the dirty work. To demean and scare people about a government-run plan, try to make people not even remember that Medicare, their Medicare program, is a government-run plan that has operated a lot more efficiently.… [T]hey want to scare you into thinking that through the anecdotes they tell you, that any government-run system, particularly those in Canada, and UK, and France that the people are very unhappy. And that these people will have to wait in long lines to get care, or wait a long time to get care. I’d like to take them down to Wise County. I’d like the president to come down to Wise County, and see some real lines of Americans, standing in line to get their care. [PBS, 7/10/2009]

Charles (“Chuck”) Grassley addresses an AARP meeting in early 2009. [Source: AARP]Republican Senator Chuck Grassley (R-IA), one of the GOP senators counted on by the Obama administration to help pass the Democrats’ health care reform package, tells a radio audience that under that reform package, Senator Edward Kennedy (D-MA) would be allowed to die. Kennedy is in the final stages of terminal brain cancer. Under the proposal, Grassley says, Kennedy would be denied care; instead, a younger patient would receive that care because they could “contribute more to the economy.” On Iowa City radio station KCJJ-AM, Grassley says: “In countries that have government-run health care, just to give you an example, I’ve been told that the brain tumor that Senator Kennedy has—because he’s 77 years old—would not be treated the way it’s treated in the United States. In other words, he would not get the care he gets here because of his age. In other words, they’d say ‘well, he doesn’t have long to live even if he lived another four to five years.’ They’d say ‘well, we gotta spend money on people who can contribute more to economy.’ It’s a little like people saying when somebody gets to be 85 their life is worth less than when they were 35 and you pull the tubes on them.” The Iowa Independent notes that the health care reform proposal has no provisions for “rationed care” of any kind, as Grassley asserts, much less a provision to deny care to elderly patients in favor of younger, more potentially productive patients. [Think Progress, 8/5/2009; Iowa Independent, 8/5/2009] Adam Lioz, a correspondent to the liberal Huffington Post, writes: “My first thought after watching video of Grassley’s statements is that he has now disqualified himself from participation in further Senate Finance Committee negotiations. How can someone act as a good-faith negotiator on a critical and complex issue while simultaneously stoking fear and spreading bald-faced lies about the content of the leading legislation on the topic? And why should Democratic senators take him seriously and continue to engage him? Bipartisanship is helpful; but at what cost?” [Huffington Post, 8/13/2009]

Top “tea party” and other conservative organizers, taking part in a private conference call, discuss their primary goal for health care reform: blocking any kind of compromise entirely, and ensuring that no health care reform package of any kind is passed. An AFL-CIO organizer manages to get involved in the call, and his notes are provided to, first, the union itself, and then to the Washington Post’s Greg Sargent. The call consists of representatives of powerful lobbying and “grassroots” organizations (see April 14, 2009, April 15, 2009, May 29, 2009, July 27, 2009, August 4, 2009, August 5, 2009, Before August 6, 2009, August 6, 2009, and August 6-7, 2009) such as the American Liberty Alliance, the “Tea Party Patriots,” and RecessRally.com (see August 5, 2009). [Plum Line, 8/11/2009] The conference call is sponsored by the “Tea Party Patriots,” which labels itself the “official grassroots American movement.” The group is sponsored and organized by, among other organizations, FreedomWorks (see April 14, 2009). When the “Tea Party Patriots” organized a trip to Washington in July, FreedomWorks provided the members with prepared packets of information and briefed them on how a visit to Capitol Hill works. [MSNBC, 8/12/2009] Sargent writes: “It’s certain to be seized on by [Democrats] to argue that organized tea party opposition to [President] Obama has no constructive intentions and is fomenting public ‘concern’ about Obama’s plan solely to prevent any reform from ever taking place. GOP officials would argue that they don’t share these goals.” The moderator on the call tells participants that bipartisan compromise on the Senate Finance Committee, where senators are holding talks, must be stopped at all costs. Organizers are told to pressure Republican senators seen as likely to compromise with Senate Democrats, including Chuck Grassley (R-IA), Mike Enzi (R-WY), and Olympia Snowe (R-ME), to stop the negotiating. “The goal is not compromise, and any bill coming out this year would be a failure for us,” the moderator says. He adds that “the Democrats will turn even a weak bill from the Senate Finance Committee into Canadian-style single-payer through underhanded implementation.” Single-payer, or a system of government-only health care, is not in any versions of the legislation in either house of Congress. Another organizer says, “The purpose of tea parties is not to find a solution to the health care crisis—it is to stop what is not the solution: Obamacare.” A spokeswoman for the American Liberty Alliance later acknowledges that comments like the ones noted by the AFL-CIO source were likely made, and that the organization’s specific goal is to prevent the current legislation in Congress from becoming law. No audio of the call exists, she claims. A “tea party” organizer later denies that his organization has any intention of “politically ‘accepting’ or denying legislation.” [Plum Line, 8/11/2009]

Bloomberg News counts up the number of lobbyists the health care industry is funding to pressure lawmakers to oppose or support the reform legislation proposed by Congressional Democrats and the White House. It finds that some 3,300 lobbyists—six for each of the 535 representatives and senators weighing the issue—are working to convince lawmakers to take their clients’ position on the health care reform package. Over 1,500 organizations, from pharmaceutical firms and medical providers to “grassroots” organizations and citizens’ groups, employ the lobbyists, with three new organizations signing up each day, and each of the 10 largest Washington lobbying firms is involved in the effort. The groups spent a combined amount of $263.4 million on lobbying Congress during the first six months of 2009, exceeding the $241.1 million spent during the same period in 2008. The Sunlight Foundation’s Bill Allison says, “Whenever you have a big piece of legislation like this, it’s like ringing the dinner bell for K Street,” referring to the Washington street where many lobbying firms have offices. “There’s a lot of money at stake and there are a lot of special interests who don’t want their ox gored.” Most lobbyists assume that health care reform is going to happen in some form or fashion, says John Jonas of the lobbying firm Patton Boggs LLP. “They assume health care reform is going to happen and they want to be protected,” he says. Jonas’s firm has three dozen clients in the debate, including Bristol-Myers Squibb and Wal-Mart. Many lawmakers, such as Senator Max Baucus (D-MT), the Senate Finance Committee chairman, see lobbyists every day. Baucus’s office rotates between different schools of lobbyists, seeing representatives of health care providers one week, purchasers the second, and consumers the third. Larry McNeely of the US Public Interest Research Group says, “The sheer quantity of money that’s sloshed around Washington is drowning out the voices of citizens and the groups that speak up for them.” [Bloomberg, 8/14/2009]

Senator Max Baucus (D-MT), the chairman of the Senate Finance Committee and a key player in the Democrats’ health care reform process, defends his insistence on a bipartisan process that will produce reform supported by both Democrats and Republicans. Yet Baucus admits that Senate Republicans are almost uniformly committed to killing reform outright. Baucus is a member of the Finance Committee’s “Gang of Six,” a group of three conservative Democrats and three Republicans who are working to craft a reform proposal. “I just think if it is bipartisan, it’s more sustainable, it’s more durable, long-lasting,” Baucus says. “There will be more buy-in around the country. We’re going to make some mistakes. If it’s bipartisan, it will be easier to fix the mistakes, work together to fix the mistakes. It’s just better for the country.” However, he says: “The Republican leadership in the Senate and in the House is doing its utmost to kill this bill. They are putting intense political pressure on Chuck Grassley, Olympia Snowe, and Mike Enzi [the three Republican members of the “Gang of Six”], to bow out, because they want to kill it. So I’ve got a challenge ahead of me to work out all this on policy as we go through these meetings. The other thing is the politics of it: ‘People, this is the right thing to do for America. I know you’re under intense political pressure, but do the right thing. I know it’s easy for me to say right now, because I’m getting beat up by both sides, but not nearly as much as you are by the Republican hierarchy.’” Baucus says it is important to craft a bill that can garner the 60 votes needed to defeat a filibuster, which the Republicans will almost certainly invoke to try to delay or kill any reform bill. He does not support the reconciliation process that would allow the bill to pass with a 51-vote majority. [Think Progress, 8/21/2009; Helena Independent, 8/21/2009]

BlueCross BlueShield logo. [Source: TopNews (.us)]Health insurers have mobilized tens of thousands of employees to fight against the Democrats’ health care reform initiative, according to reports by the Los Angeles Times and the Wall Street Journal. The insurance industry’s primary motive seems to be financial gain, according to the Times reporters. Many of the nation’s largest insurers, including UnitedHealth, have urged their employees to become involved in protesting health care reform, and provided advocacy “hot line” telephone numbers, printed “talking points,” sample “letters to the editor,” and other materials in almost every Congressional district throughout the nation. And many insurers, including BlueCross Blue Shield, have sponsored anti-reform television ads targeting conservative “Blue Dog” Democrats, many of whom are considered vulnerable to pressure from the industry. The insurance industry is paying for over 900 lobbyists, spending $35 million in the first half of 2009 lobbying Congress and the White House. AFL-CIO spokesman Gerald Shea says: “They have beaten us six ways to Sunday. Any time we want to make a small change to provide cost relief, they find a way to make it more profitable.” [Los Angeles Times, 8/24/2009; Wall Street Journal, 8/24/2009]Jamming the 'Town Halls' - Insurers like UnitedHealth and others are sending their employees to “town hall” meetings to protest against reform. The Journal reports, “[T]he industry employees come armed with talking points about the need for bipartisan legislation and the unintended consequences of a government-run health plan to compete with private insurers.” But they are instructed not to become contentious and argumentative, according to a “Town Hall Tips” memo provided by the industry’s chief lobbying organization, America’s Health Insurance Plans (AHIP—see Before August 6, 2009). The memo warns those attending the meetings to expect criticism, and to stay calm. “It is important not to take the bait,” the memo cautions. AHIP president Karen Ignagni says the town hall meetings are an opportunity “to strongly push back against charges that we have very high profits. It’s very important that our men and women… calmly provide the facts and for members of Congress to hear what these people do every day.” Larry Loew, who works for the insurance administration firm Cornerstone Group, says he attended a recent town hall meeting hosted by Representative Alan Mollohan (D-WV) because “my whole industry is being threatened.” Loew claims he was not coached by AHIP, but admits to preparing for the meeting by gathering talking points from hospital and insurance company Web sites. AHIP spokesman Robert Zirkelbach says about 50,000 employees have been engaged in writing letters and making phone calls to politicians or attending town hall meetings. [Wall Street Journal, 8/24/2009]'Hallelujah!' - One industry proposal that is gaining traction among some in Congress is the so-called “individual mandate,” which would require all citizens to buy some form of health insurance. That provision would guarantee insurers tens of millions of new customers—many of which would receive government subsidies to help pay the premiums. Robert Laszewski, a former health insurance executive who now heads the consulting firm Health Policy and Strategy Associates, says of the provision, “It’s a bonanza.” The industry’s reaction to early negotiations can, Laszewski says, be summed up in a single word: “Hallelujah!” Linda Blumberg, a health policy analyst at the nonpartisan Urban Institute, says, “The insurers are going to do quite well” with health care reform. “They are going to have this very stable pool, they’re going to have people getting subsidies to help them buy coverage, and… they will be paid the full costs of the benefits that they provide—plus their administrative costs.” Aetna’s chief executive, Ron Williams, says: “We have to get everyone into the insurance market. That is a huge, big deal [and] everyone has coalesced around that.” [Los Angeles Times, 8/24/2009; Wall Street Journal, 8/24/2009]Battling the Public Option, - Insurers have fought most strongly against the so-called “public option,” which would create a government-run, non-profit alternative to private health insurance. Some polls are showing public support for the public option has declined, and stock prices for the insurance corporations have tracked upwards. Other insurance industry proposals are gaining ground. The Senate Finance Committee is considering a proposal to lower the proposed mandatory reimbursement rate for insurers to policyholders from 76 percent to 65 percent, and the industry is pressuring Congress to lower the limit that insurers must meet to cover a policyholder’s medical bills, leaving more of the money it gleans from premiums as profits. “These are a bad deal for consumers,” says J. Robert Hunter, a former Texas insurance commissioner who works with the Consumer Federation of America. Insurance companies would reap huge profits by providing less insurance “per premium dollar,” he says. Former Cigna executive Wendell Potter says, “It would be quite a windfall” for the insurance industry. [Los Angeles Times, 8/24/2009]

Opponents of health care reform lead the debate during a speech and followup session by Senator Mike Enzi (R-WY), one of the so-called “Gang of Six” who are helping to write the Senate Finance Committee’s health care reform proposal. Around 500 people attend the event, held in a high school gym in Gillette, Wyoming. Enzi lambasts Senate Democrats and the White House for not engaging in what he calls “bipartisan collaboration” on reform, and calls for “market-based” health care solutions. Enzi says he has no use for a so-called “public option,” which would mandate a government-run alternative to private health care. “A government option is a monopoly, and it’s no option,” Enzi says, earning a strong round of applause. State Representative Timothy Hallinan, a Gillette Republican, earns more applause when he urges Enzi to pull out of negotiations with Senate Democrats and oppose any reform bill. When urged to do so by an audience member who identifies himself as a Republican, Enzi claims: “If I hadn’t been involved in this process as long as I have and to the depth as I have, you would already have national health care.… Someone has to be at the table asking questions. If you’re not at the table, you’re on the menu.… It’s not where I get them to compromise, it’s what I get them to leave out.” Some pro-reform members of the audience note the large amounts of campaign contributions Enzi has taken, and argue for the public option. Enzi retorts by claiming two government-run medical programs, Medicare and Medicaid, are “going broke,” and a public option program would suffer the same fate. [Associated Press, 8/25/2009]

Conservative radio host Rush Limbaugh applauds Representative Joe Wilson (R-SC) for shouting “You lie!” at President Obama during the president’s address to Congress (see September 9, 2009), and tells his listeners he wished Wilson had not apologized for his outburst (see September 9-10, 2009). Limbaugh calls Obama’s assertion that health care reform would not include free care for illegal immigrants “a blatant lie,” and says he is disgusted that so many Republicans called on Wilson to apologize for his behavior. The Obama administration, Limbaugh claims, “is trying to totally tear down the institutions and traditions that have made this country great,” and he says Wilson is merely speaking the truth. Obama “is lying… from the moment he opens his mouth until he ends the speech. I was shouting ‘You’re lying!’ throughout the speech, at the television. ‘You’re lying!’ ‘That’s a lie!’ Joe Wilson simply articulated what millions of Americans were saying.” [Media Matters, 9/10/2009] Time’s Michael Scherer notes that the Senate Finance Committee’s working draft contains the line, “No illegal immigrants will benefit from the health care tax credits.” HR 3200, the House reform bill, contains Section 246, which is titled “NO FEDERAL PAYMENT FOR UNDOCUMENTED ALIENS.” [Time, 9/10/2009]

The Pharmaceutical Research and Manufacturers of America (PhRMA) acknowledges it has funded a series of television advertisements in support of legislation primarily written by Max Baucus (D-MT), chairman of the Senate Finance Committee, to reform US health care. The television ads are part of an agreement between the Obama administration, Baucus, and PhRMA in June, where the organization agreed to various givebacks and discounts designed to reduce America’s pharmaceutical spending by $80 billion over 10 years. PhRMA then set aside $150 million for advertising to support health care legislation. More progressive House Democrats such as Henry Waxman (D-CA) are pushing for stiffer drug industry givebacks than covered in the deal. PhRMA is led by Billy Tauzin, a former Republican congressman. Until recently, the organization spent some $12 million on ads by an offshoot coalition called Americans for Stable Quality Care, and aired television ads such as “Eight Ways Reform Matters to You.” PhRMA’s new ads will specifically support the Baucus bill. Many are critical of the deal, with James Love of the progressive research group Knowledge Ecology charging, “Essentially what the US got was not $80 billion, but $150 million in Obama campaign contributions.” [New York Times, 9/12/2009] Investigative reporter Matt Taibbi agrees with Love, accusing the White House of colluding with Baucus and Tauzin’s PhRMA to orchestrate a “big bribe” in exchange for the Democrats’ dropping of drug-pricing reform in the Baucus bill. Taibbi writes that in June, White House chief of staff Rahm Emanuel met with representatives from PhRMA and drug companies such as Abbott Laboratories, Merck, and Pfizer to cut their deal. Tauzer later told reporters that the White House had “blessed” a plan involving the $150 million in return for the White House’s agreement to no longer back government negotiations for bulk-rate pharmaceuticals for Medicare, and to no longer support the importation of inexpensive drugs from Canada. Taibbi writes that the White House worked with Baucus and PhRMA to undercut Waxman’s attempts to give the government the ability to negotiate lower rates for Medicare drugs. PhRMA’s ads are being aired primarily in the districts of freshmen Democrats who are expected to face tough re-election campaigns, and in the districts of conservative “Blue Dog” Democrats, who have sided with Baucus, Obama, and PhRMA to oppose the Waxman provision in favor of PhRMA’s own provision, which would ban the government from negotiating lower rates for Medicare recipients. [True/Slant, 9/14/2009]

Max Baucus (D-MT), the chairman of the Senate Finance Committee, releases his committee’s final version of health care reform, a version known as the “chairman’s mark.” None of the Republicans on the committee support the bill (known as the “America’s Healthy Future Act,” or AHFA), and some Democrats, including John D. Rockefeller (D-WV), have serious questions about it as well. Baucus says: “The $856 billion dollar package will not add to the federal deficit. The Finance Committee will meet to begin voting on the chairman’s mark next week.” An analysis by the Congressional Budget Office (CBO) shows that the bill will actually “result in a net reduction in federal budget deficits of $49 billion over the 2010-2019 period.” Senators Charles Grassley (R-IA) and Mike Enzi (D-WY) have said that they want a much smaller bill that imposes no fees on health insurance companies, prevents legal immigrants from gaining coverage for five years, and bans any federal coverage for abortions. The Baucus bill does not allow for federal monies to be used for abortions, as Republicans have insisted upon, with the exception of situations involving rape or incest. Illegal immigrants are not provided coverage through the bill; legal immigrants cannot get government subsidies and must wait five years before qualifying for Medicaid. Immigrants’ citizenship status will be verified, as Republicans have requested. Another Republican provision, “tort reform” (efforts to reduce legal claims against doctors and HMOs), is part of the bill. There is no “public option” for government-financed health care for uninsured citizens, as Republicans and conservative Democrats have demanded. The bill allows for the purchasing of insurance across state lines, for “high-deductible” policies, and for so-called “high-risk pools,” three provisions Republicans have demanded. And, beginning in 2014, federal monies will be made available “to all states to defray the costs of covering newly-eligible beneficiaries.” [111th Congress, 1st Session, 9/16/2009; Think Progress, 9/16/2009; Think Progress, 9/17/2009] Even after seeing a bill with so many inclusions they have asked for, Senate Republicans continue to insist that there is nothing in the bill they can support. [Think Progress, 9/17/2009]

Max Baucus (D-MT), chairman of the Senate Finance Committee, makes several revisions to the “final” draft of the Chairman’s Mark of the America’s Healthy Future Act (AHFA, the name for health care reform legislation—see September 16-17, 2009). The “chairman’s mark” is a recommendation by a committee or subcommittee chair of measures to be considered in a markup, and is usually drafted as a bill. Baucus says in a statement: “The modifications focus largely on making care more affordable for low and middle income Americans by increasing the Health Care Affordability Tax Credit, lowering the penalties for people who fail to meet the individual requirement to have health insurance, and increasing the High Cost Insurance Excise Tax threshold for people whose basic health care is more expensive… and effectively slows the growth of skyrocketing health care costs.… This modification incorporates important ideas from my colleagues on both sides of the aisle.” According to Baucus, AHFA as it now stands will make it easier for families and small businesses to buy health care coverage, ensure Americans can choose to keep the health care coverage they have if they like, and slow the growth of health care costs over time. “It will bar insurance companies from discriminating against people based on health status, denying coverage because of pre-existing conditions, or imposing annual caps or lifetime limits on coverage.” Baucus continues to assert that AHFA will not add to the federal deficit. Some of the new provisions include: Lowering the amount that insurance companies can vary premiums based on age, ensuring that these companies cannot charge elderly clients far more than younger ones. The provision was first submitted by Senators John Kerry (D-MA) and Ron Wyden (D-OR). Providing $5 billion in additional assistance to small businesses attempting to provide coverage for their workers. The provision was first submitted by Senators Kerry and Debbie Stabenow (D-MI). Including more senior citizens in the Medicare Advantage program. Making prescription drugs more affordable for senior citizens by reducing co-payments. This provision was first submitted by Senators John D. Rockefeller (D-WV), Jeff Bingaman (D-NM), and Ben Nelson (D-NE). Improving Medicare beneficiary access to bone density tests, a provision first submitted by Senator Blanche Lincoln (D-AR). Creation of a three-year Medicare Hospice Concurrent Care (HCC) demonstration program that would provide Medicare patients eligible for hospice care with all other Medicare-covered services during the same period of time. This provision was first submitted by Senator Wyden. Improving access to Home and Community Based Services (HCBS) for low income individuals in Medicaid who are in need of long-term care, a provision first submitted by Senator Kerry. Creating nursing home alternatives for patients in need of long-term care, a provision first submitted by Senator Maria Cantwell (D-WA). Provide alternatives to nursing home care for disabled individuals on Medicaid, a provision first submitted by Senator Charles Schumer (D-NY). Improving access to mental health care for Medicaid patients, a provision first submitted by Senator Olympia Snowe (R-ME). Financial assistance for “high-need” states having difficulty paying for their Medicaid obligations, and use of surplus Medicaid funds to improve the program. Create an exemption to encourage health care beneficiaries to use generic prescription drugs by waiving co-payments, a provision first submitted by Senator Stabenow. Remove the mandate that would require states to cover all prescription drugs for Medicaid beneficiaries. Direct the secretary of health and human services to implement programs to reduce waste in the way drugs are dispensed to seniors in long term care facilities. [Senior Journal, 9/22/2009; New York Times, 9/22/2009; The Capitol (.net), 2011]

America’s Health Insurance Plans (AHIP), the health insurance industry’s largest lobbying organization, releases a study that claims the Democrats’ health care reform initiative would send health insurance costs sharply upward. The study is released the day before the Senate Finance Committee votes on its version of the reform proposal. [The Week, 10/12/2009] AHIP says it intends to circulate the study among lawmakers on Capitol Hill and use it as the basis for new advertisements attacking the health care reform proposals. [Washington Post, 10/12/2009] NBC Washington calls the study “a surgical strike against Democrats’ best hope for passing health reform,” specifically targeting the Finance Committee’s legislative efforts, which it calls the “Baucus bill” for committee chairman Max Baucus (D-MT). Until now, AHIP has operated largely behind the scenes to delay or terminate Congressional efforts to reform US health care; the study marks its most public and overt effort to influence the discussion. According to the study, which was carried out by accounting and services firm PriceWaterhouseCoopers (PWC) and paid for by AHIP, the average cost increase would be $1,700 per family per year by 2013. “[T]he cumulative increases in the cost of a typical family policy… will be approximately $20,700 more than it would be under the current system,” the report claims. “[T]he cost of coverage for both single and family policies in the individual, small group, large group, and self-funded insurance markets” will rise dramatically. AHIP official Karen Ignagni says private insurers would almost certainly pass cost increases to consumers for a number of reasons, including her claim that too many people with pre-existing conditions would sign up for insurance. “The report makes clear that several major provisions in the current legislative proposal will cause health care costs to increase far faster and higher than they would under the current system,” she writes. Baucus calls the study “seriously flawed.” A spokesman for the Finance Committee, Scott Mulhauser, says: “Now that health care reform grows ever closer, these health insurers are breaking out the same, tired playbook of deception to prevent millions of Americans from getting the affordable, accessible care they need. It’s a health insurance company hatchet job, plain and simple.” [America's Health Insurance Plans, 10/11/2009; NBC Washington, 10/12/2009; Washington Post, 10/12/2009] An analysis of the committee’s proposal by the Congressional Budget Office (CBO) shows that while some people’s premiums would go up, the subsidies to be provided by the government would make health insurance considerably less expensive for most consumers. According to the CBO, premiums under the government “exchange” option proposed in the Baucus bill would cost consumers $14,400 per year in 2016, while the average private insurer would charge their customers $21,300 by 2016. [Think Progress, 10/12/2009] Nancy-Anne DeParle, director of the White House Office of Health Reform, says PWC is not the firm to have carried out such a study. “Those guys specialize in tax shelters,” she says. “Clearly this is not their area of expertise.” [Washington Post, 10/12/2009] Almost immediately after the study’s release, critics begin attacking it, calling it deeply flawed and an “industry hit job” (see October 11-12, 2009). And PWC itself will back away from the study’s central claims (see October 12, 2009).

Within minutes of the release of a new study by health insurance lobbying firm America’s Health Insurance Plans (AHIP) that claims health care reform would drastically raise costs to American families (see October 11, 2009), critics from different sides of the political divide dispute the study’s accuracy and question its impartiality. White House: Study Ignores Key Elements of Reform - White House assistant press secretary Reid Cherlin says the study “conveniently ignores critical policies that will lower costs for those who have insurance, expand coverage, and provide affordable health insurance options to millions of Americans who are priced out of today’s health insurance market or are locked out by unfair insurance company practices.” [MSNBC, 10/12/2009]'Blowback' from Study Possible - White House and Senate officials say that the insurance industry may suffer “blowback” over the report. Democrats may well close ranks behind either the Senate Finance Committee (SFC) bill or another version of the legislation, and liberal lawmakers may go after the insurance companies, maybe by proposing a cap on premiums or solidifying support for the government insurance plan. “They have opened themselves up,” says a senior Senate Democratic aide. “It is an incredibly stupid strategic blunder. If you are going to fire a shot like this, you fire a good shot.” Former industry executive Wendell Potter, who has become an industry whistleblower (see July 10, 2009), says AHIP is responding to critical analyses from Wall Street that the legislation will hurt private insurers. “Karen [AHIP official Karen Ignagni] had no alternative because the CEOs were so determined to do something to try to sway the committee to back off the reductions,” he says. “She didn’t have an alternative. They are obviously doing this on the eve of the vote in the Senate Finance Committee, hoping enough members of the committee would be concerned, to restore it. I think the strategy will backfire.” [Politico, 10/12/2009]Economist: Study Fundamentally Flawed - MIT economist Jonathan Gruber analyzes the PWC study and concludes that it is fundamentally flawed. He writes: “The nonpartisan analysis based on information from the CBO [Congressional Budget Office] shows clearly that for those facing purchase in the non-group market, the SFC bill will deliver savings ranging from several hundred dollars for the youngest consumers to over $8,500 for families. This is in addition to all the other benefits that this legislation will deliver to those consumers—in particular the guarantee, unavailable in most states, that prices would not be raised or the policy revoked if they became ill.” On MSNBC, Gruber notes: “If the report had came out and said, ‘look we need stronger penalties, or premiums will go up,’ that’s a very valid point to make. But what the report says is that it went too far. It said with the current structure, premiums will be much higher than they are today. And that’s just wrong. I mean, the nonpartisan Congressional Budget Office has came out and said that for this bill, premiums in the exchange will be lower than they are in the none group market today. So they just drew the wrong comparison.” [Massachusetts Institute of Technology, 10/12/2009; Think Progress, 10/13/2009]Democrats: Proof that Industry Needs Further Regulation - Representative Anthony Weiner (D-NY) says, “[T]he health insurance lobby today fired the most important salvo in weeks for the public option,” and adds that the study proves the industry needs further regulations imposed on it by Congress: “If you have the health care industry complaining that we’re going to raise costs because of these changes, it is them putting us on notice that we haven’t put enough cost containment in the bill. You know, the health care industry themselves is putting out a whole report saying that. That should be a tell to the [Senate Finance Committee] that you know what, maybe it’s time for them to go back and revisit the public option. In a strange way, and look, obviously they didn’t mean this, the health insurance lobby today fired the most important salvo in weeks for the public option, because they have said, as clear as day, left to their own devices, according to their own number crunchers, they’re going to raise rates 111 percent.” [Think Progress, 10/12/2009] Senator John D. Rockefeller (D-WV) charges the insurance industry with releasing a false study for political purposes. “The misleading and harmful claims made by the profit-driven insurance companies are politicking for corporate gain at its worst,” he says. “Their recent statements only further highlight that our focus here in Congress must be on the inclusion of a public health insurance option in the marketplace to protect families and put more money back in their wallets by creating greater competition and driving down costs.” [Politico, 10/12/2009]Washington Post: 'Industry Hit Job' - The Washington Post’s Ezra Klein calls the report “deceptive” and “a predictable industry hit job,” and notes that the study was produced by accounting and services firm PriceWaterhouseCoopers (PWC), which in the 1990s was commissioned by the tobacco industry to do a study on the economic catastrophe that would result from taxing tobacco products. That study was found to be unreliable, and, perhaps not surprisingly, made all of its errors in favor of the tobacco industry. Klein writes that the same effect can be observed in this report on health care. He concludes: “But if the [study] doesn’t offer much in the way of trustworthy policy analysis, it is an interesting looking at the changing politics of the issue. In short, the insurance industry is getting scared. After many months of quiet constructiveness, they’re launching a broadside on the week of the Senate Finance Committee’s vote. The White House, which had a pleasant meeting with the industry’s leadership last week, was shocked by the report, and so too was the Senate Finance Committee. The era of cooperation seems to be over, and they weren’t given much advance warning. But the report might have another impact, too: The evident anger and fear of the insurance industry might do a bit to reassure liberals that this plan is worth supporting, after all.” [Washington Post, 10/12/2009]New Republic: 'Questionable Assumptions' - The New Republic’s Jonathan Cohn chastizes PriceWaterhouse for deliberately, and explictly, choosing to believe that all the new factors included in the study will raise costs, when other analyses show that many of those factors will actually drive costs down. Cohn writes that the study is based on a plethora of “strange [and] questionable assumptions.” [New Republic, 10/11/2009]Progressive Columnist: 'This Is News?' - Progressive columnist Josh Marshall wrote before the study was released: “Let me get this right. The big news tomorrow is that ‘America’s Health Insurance Plans’ (AHIP, aka the health insurance lobby) has commissioned a study by PriceWaterHouseCoopers that comes to the conclusion that the Senate Finance Committee bill is a bad, bad thing and would lead to health care costs going up even faster than they are under the current system. This is news?” [Talking Points Memo, 10/12/2009]Washington Times: Defending the Study, Attacking the CBO - The conservative Washington Times defends the study as essentially accurate, and instead attacks the Congressional Budget Office, whose own figures differ dramatically from the PWC study. The Times editorial board calls the CBO’s estimates “fanciful” and “grandly overoptimistic,” and accuses the Democrats of adding opportunities for consumers to “game the system”—“It’s a mystery how the CBO can make its evaluation without once mentioning that individuals easily will be able to go without insurance while they are healthy and then buy insurance after they get sick.” The entire proposal allows Democrats to “avoid electoral accountability over the urgent health care needs of the people they say they’re trying to help but won’t.” [Washington Times, 10/12/2009]AHIP Defends Study - Ignagni defends the study and says the lobbying firm did not release it to undermine the Finance Committee’s attempt to craft an acceptable reform bill. She says the industry’s main concern is getting everyone involved in health care to work together to bring costs down. There is a strong need, she says, to “encourage all the other stakeholders to participate in a broader effort so that they can too lend a hand and get costs under control in a much more effective way than we would.… We don’t see comprehensive cost control in any legislation.” [MSNBC, 10/12/2009]PWC Backs Off from Study - Late in the evening, PWC issues a statement noting that the study only examined “a small slice” of the health care reform initiative, and saying that if other provisions in the reform package succeed in lowering costs, then the estimates of cost increases claimed in the study would be inaccurate (see October 12, 2009).

Victims of Stalin’s gulags. [Source: Answering Christianity (.com)]Representative John Shadegg (R-AZ) tells his House colleagues that health care reform will result in “Soviet-style gulag(s)” for Americans. Shadegg says: “You know, it occurs to me, and I’ll go through these other scandals very quickly, but what we’re really getting here is we’re not just getting single-payer care. We’re getting full on Russian gulag, Soviet-style gulag health care.… It appeared in last Friday’s Wall Street Journal. You can Google it. You can pick up the phone and call Kim Strassel [a Wall Street Journal columnist who wrote about the “hidden costs” of the Senate Finance Committee’s reform legislation on October 9]. You can ask her about Soviet-style gulag health care in America, where powerful politicians protect their constituents.” Progressive news and advocacy Web site Think Progress calls Shadegg’s statement a “new low” in anti-reform rhetoric, and tells its readers: “The Soviet gulags were a network of prisons and forced labor camps that held as many as 20 million people during Stalin’s reign of terror. It is estimated 1.5 million died in the camps.” [Think Progress, 10/14/2009]

Senator Charles Grassley (R-IA), one of the key Republicans in the health care debate (see August 12, 2009 and August 19, 2009), now says that any attempt by Congress to incorporate the so-called “individual mandate” might be unconstitutional. An individual mandate provision, under consideration by Grassley’s Finance Committee, would require Americans to purchase some form of health insurance. “[T]his is the first time in the 225-year history of our country that we have forced you as a constituent, any of our constituents, to buy a product,” he says. “You know, you’ve been free to buy or not buy. But now for the first time you’re going to have to buy health insurance. If you don’t buy it, IRS is going to tax a family $1,500.” Asked, “[I]s that constitutional, forcing somebody to buy it and punishing them through the IRS if they don’t?” Grassley replies: “I’m not a lawyer, but let me tell you, I’ve listened to some lawyers speak on this. And you know, it’s a relatively new issue. I don’t think we’ve ever had this issue before of having to buy something. And a lot of constitutional lawyers, saying it is unconstitutional or at least in violation of the 10th Amendment. Now maybe states can do this, but can the federal government? So, I have my doubts.” Progressive news and advocacy Web site Think Progress notes that in June 2009, Grassley said “there isn’t anything wrong with” mandates and that he believed there was “a bipartisan consensus to have individual mandates.” The site also notes that the US Constitution provides for the federal government’s right to enact wide-ranging regulatory programs, a power generally upheld by the Supreme Court. [NewsMax, 10/14/2009; Think Progress, 10/15/2009]

Senate Finance Committee Chairman Max Baucus (D-MT) asks the IRS to investigate a number of private organizations organized under the nonprofit, tax-exempt 501(c)4 and (c)6 status to ensure that they are not violating tax law. Such groups can engage in political activity, such as funding television ads for or against candidates for office, as long as their primary purpose is not politically motivated. Baucus writes in his letter to the IRS that he believes many of these groups, most of whom support Republican candidates and/or attack Democratic candidates, are almost exclusively focused on politics. The tax laws organizations such as Crossroads GPS and Americans for Job Security (AJS) operate under allow them to keep information about their donors secret while simultaneously running advertisements in elections. Baucus asks the IRS to examine whether the groups’ “political activities reach a primary purpose level” and “whether they are acting as conduits for major donors advancing their own private interests regarding legislation or political campaigns, or are providing major donors with excess benefits.” He continues, “Possible violation of tax laws should be identified as you conduct this study,” and adds that the committee plans to “open its own investigation and/or to take appropriate legislative action.” In his letter he notes that an “Alaska Public Office Commission investigation revealed that AJS, organized as an entity to promote social welfare under 501(c)(6), fought development in Alaska at the behest of a ‘local financier who paid for most of the referendum campaign.’ The Commission report said that ‘Americans for Job Security has no other purpose other than to cover money trails all over the country.’ The article also noted that ‘membership dues and assessments… plunged to zero before rising to $12.2 million for the presidential race.’” He also provides information about another, unnamed 501(c)4 group, which “transform[ed] itself into a nonprofit under 501(c)(4) of the tax code, ensuring that they would not have to ‘publicly disclose any information about its donors,’” and engaging primarily in political activity. He asks, “Is the tax code being used to eliminate transparency in the funding of our elections—elections that are the constitutional bedrock of our democracy?” He also writes that the IRS should be concerned “whether the tax benefits of nonprofits are being used to advance private interests.” He concludes by writing that the committee will open its own investigation into the matter. [Politico, 9/29/2010]

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